How Kentucky USDA loans work
A Kentucky USDA home loan is a mortgage option that allows you to purchase with zero down
payment. The loan is issued through the USDA (United States Department of Agriculture)
and the program is properly known as the USDA Rural Development Guaranteed Housing
Loan Program. Though these loans are more commonly known for being available in rural
How Does the USDA Loan Work in Kentucky?
Surprisingly, a USDA loan is not much different than a conventional loan. Yes, the property
will have to qualify for coverage, but when you find one that does, the borrowing process is
much the same as it would be for any other type of loan. The USDA backs the loan, so
there may be certain lender requirements (regarding the property and income/housing size
considerations). However, there is no money down required—which can make it a very
attractive option for some borrowers.
Who Qualifies for a Rural Housing KY USDA Loan?
The USDA is focused on helping those who have the greatest need. This means that it can
be easier to qualify for this loan than many other standard loans, especially if the
household income is on the low end. The exact borrowing requirements can vary from
area to area and even property to property and we’ll go over some in the next chapter.
What is a Kentucky USDA Loan?
In the last paragraphs, we mentioned that there is no down payment required, so buyers can
purchase a home even if they don’t have savings. However, for Kentucky first-time home-buyers the
qualification process can be a bit overwhelming. We’ve detailed some of the common
steps you will go through if you are interested in buying a home with the USDA program.
Determine if You Qualify
The Rural Kentucky USDA lending program is only open to certain income levels. This varies depending
on your location and family makeup.
We’ll consider your income, credit history and
discuss the types of homes that are eligible.
Pre-approval will make buying your dream home easier and the process smoother. In this
step we will figure out the amount Liberty Financial will lend you. When making an offer
on a home this will make the process faster and give you some negotiation power.
Find a Home that Qualifies
Not every home qualifies for USDA lending. You can often find homes that would qualify
for a USDA loan on websites www.kentuckyusdaloan.com
Qualifying and Next Steps with USDA Loans
Go through the Inspection/Appraisal Process
The home will need to appraise for the sales price and the inspector may find issues that
must be corrected before approval.
Put in an Offer and Get Approval
Once you’ve found a home and have a contract on it, your lender will put together your
information and send it for approval to an underwriter.
Once you’ve been approved and the home appraises, closing will be scheduled. At this
point, the process should be just like any other home purchase. Remember, you won’t need
a down payment, but there may be closing costs for which you are responsible, depending
on the deal you’ve negotiated.
Finally, realize that purchasing a home using ANY loan can be a complicated process. The
best way to make sure you are on the right path is to work with an experienced lending
company. Liberty Financial is highly experienced with USDA loans as well as other popular
Kentucky First Time Home buyers and USDA Loans
The goal of the USDA program is to “improve the
economy and quality of life in rural America.” The
most exciting thing about a USDA loan is that it
requires no money down—making first time
home-ownership accessible for those who may not
have thousands sitting around for a down payment.
Kentucky USDA Loans vs. Kentucky FHA Loans
One of the most difficult parts of buying a home is deciding on the right kind of loan for
your particular situation. With all of the options, it can become very frustrating to sort
through the details. A loan that is often mentioned is FHA loans. While these are clearly not
the same thing as USDA loans, there are some similarities, but there are key differences
too. Here are some basic questions we hear about the loans so you can compare and
What Do the Loans Have in Common?
Both the FHA loan and the USDA loan are excellent options for
those looking to borrow who may have trouble saving a large down
payment. Both have small or nonexistent down payment
requirements. Also, qualifications may be a bit easier for lower
income borrowers than a traditional loan.
What Makes an FHA Loan Unique?
The FHA loan, which is a part of the Federal Housing
Administration program, doesn’t usually have area restrictions,
although certain properties may not qualify for other reasons. In
addition, qualifications as far as credit level and debt-to-income
ratio may be a bit stricter for FHA loans than USDA loans.
What Makes a USDA Loan Unique?
The USDA loan program, offered by the United States Department
of Agriculture, is designed to boost interest in rural areas. As such,
the loan is only available for certain properties. This requirement
doesn’t mean that you are limited only to farmland, many suburban
and semi-rural communities qualify. USDA loans do have an
income cap, and the organization targets it towards those with
Refinancing and Kentucky USDA Loans
There is a lot of talk these days about refinancing home loans. If you’ve watched TV or
listened to the radio at all lately, you’ve probably heard commercials regarding mortgage
refinancing. However, if you have a USDA loan, you may think that this option doesn’t apply
In reality, that is not the case. Like most other mortgages, it is possible to refinance a
USDA loan. However, because of the unique nature of the USDA loan, refinancing isn’t the
same as it would be with any other loan.
In recent years, the USDA has made refinancing USDA loans easier, with a USDA
Streamline Refinance program. The process is considered streamlined because much of
the information you used when applying for your loan can be utilized during the refinance
process--saving time and effort.
Requirements to be eligible for a USDA Refinance
While you should talk to your lender about the specifics, some of the basic requirements
✓ The mortgage must already be a USDA loan
✓ The mortgage must not be delinquent
✓ The refinance will need to lower the monthly payment
✓ No cash may be taken out during the refinance process
✓ The past 12 payments should have been made on time
The most important thing to remember is that refinancing a USDA loan does have certain
special requirements and it may take a little more work. That’s why it is vital that you work
with a mortgage company that understands USDA loans AND one that is comfortable
handling the refinance process.
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant Equal Opportunity Lender. NMLS#57916http://www.
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Mortgage Loan Officer